Q4 2024 Cohen & Co Inc Earnings Call
The company advises you to read the cautionary note regarding forward looking statements in its earnings release and its most recent annual form report on Form 10-K filed with the FCC.
Earlier today Cowen and company issued a press release announcing fourth quarter and full year 'twenty 'twenty four financial results.
Today's discussion is complementary to that press release, which is available on the company's website at Cowen and company Dotcom.
Conference call is being recorded and a replay will be available for three days beginning shortly after the conclusion of this call. The Cup. Today's remarks also include certain non-GAAP financial measures that management believes are meaningful when evaluating the company's performance a reconciliation of these non-GAAP.
Speaker Change: Financial measures to comparable GAAP measures is provided in the company's earnings release after their prepared remarks, the call will be opened for questions I would now like to turn the call over to Mr. Lester Brafman, Chief Executive Officer of Cowen and company. Please go ahead Sir.
Speaker Change: Thank you Sherry and thank you everybody for joining us for our fourth quarter 2024 earnings call with me on the call is Joe Pooler, our CFO.
Speaker Change: In 2020 for Cohen <unk> company capital markets are full service boutique investment bank, which referred to as CCM continue to grow market share as an adviser agent and expanding into underwriting initial public offerings.
Speaker Change: CCM revenue was down compared to the third quarter of 2020 for our actions to strengthen the business throughout the year generated full year CCM revenue of $38 $9 million from nearly 50 clients and almost double the full year 2023, CCM revenue of $21 9 million.
Speaker Change: Despite continued elevated mortgage rates and lower levels of mortgage origination we were able to grow our mortgage business in 2024, ending the year with the gestation repo book of $2 7 billion.
Speaker Change: Other than 30% from December 2023.
Speaker Change: We remain confident about our future earnings potential and are focused on enhancing long term sustained value for our stockholders, including through continued payment of our quarterly dividend now.
Speaker Change: Now I would turn it turn the call over to Joe to walk through this quarters financial highlights in more detail.
Speaker Change: Thank you Lester I will begin with a discussion of our operating results for the quarter. Our net loss attributable to Cohen <unk> Company, Inc. Was <unk> 2 million for the quarter were $1 21 per fully diluted share compared to net income of $2 2 million for the prior quarter.
Speaker Change: $1 31 per fully diluted share and net income of $4 5 million for the prior year quarter or $2 97 per fully diluted share.
Speaker Change: Our adjusted pre tax loss was $7 7 million for the quarter compared to adjusted pre tax income of $7 7 million for the prior quarter and adjusted pre tax income of $16 million for the prior year quarter.
Speaker Change: As a reminder, adjusted pre tax income loss is a key earnings measurement for us as it incorporates enterprise earnings attributable to our convertible Noncontrolling interest, which is substantially held by our founder and Chairman Daniel Cohen, Daniel holds whose interest in the enterprise through the prime.
Speaker Change: Mary operating subsidiary Cowen and company LLC, which is a consolidated subsidiary of Cohen <unk> Company, Inc.
Speaker Change: New issue and advisory revenue was 10 million in the fourth quarter, a decrease of $12 4 million from the third quarter and a decrease of $8 6 million from the year ago quarter. Our revenue earned from new issue and advisory revenue has been and we expect we will continue to be volatile we earned revenue from Illumina.
Speaker Change: The number of engagements a small change in the number of engagements can result in quarter to quarter fluctuations and the revenue recognized.
Speaker Change: The average revenue per engagement can fluctuate as well.
Speaker Change: Our revenue is generally earned when an underlying transaction closes does the timing of underlying transactions increases the volatility of our revenue recognition.
Speaker Change: In addition, we have received financial instruments as consideration for advisory services provided by our CCM team instead of cash at times.
Speaker Change: <unk> investments are included in our other investments at fair value line item in the balance sheet.
Speaker Change: CCM generated a total of $61 6 million new issue and advisory revenue during 2024, but this amount was offset by $22 6 million of negative principal transactions revenue during 24 related to losses on investment assets received as consideration.
Speaker Change:
Speaker Change: Net trading revenue came in at $8 9 million in the quarter, which was comparable to the third quarter and up $1 1 million from the fourth quarter of 'twenty three.
Speaker Change: Our asset management revenue totaled $2 1 million in the quarter, which was slightly which was down slightly from the prior quarter and up slightly from the prior year quarter.
Speaker Change: Fourth quarter principal transactions and other revenue was negative $2 5 million, primarily due to mark to market adjustments on our principal investments related to previously received consideration by our CCM team and as well as our ongoing involvement in the spec market as an asset manager and an investor.
Speaker Change: Which has resulted in increased holdings of public equity positions and post business combination companies equity.
Speaker Change: Equity value post business combination Spacs has continued to decline leading many of the shares we receive to decrease in value negatively impacting both the equity method and the principal transactions line item.
Speaker Change: Line items in our statement of operations.
Speaker Change: We anticipate that there will continue to be volatility in our principal portfolio and therefore, our operating results as.
Speaker Change: As previously noted in certain cases, we do receive investment banking consideration from clients, including these back clients in the form of investment assets and those investment assets has subsequently fallen in value.
Speaker Change: Principal transactions revenue includes all gains and losses and income earned on our $33 $6 million net investment portfolio.
Speaker Change: Compensation and benefits expense for the quarter was $12 9 million, which was down from both prior quarters, primarily due to fluctuations in revenue income from equity method affiliates net of our non convertible non controlling interest and the related variable incentive compensation.
Speaker Change: Number of company employees was 113 at the end of the year compared to 113 at the end of the prior quarter and 119 at the end of the prior year.
Speaker Change: Net interest expense for the quarter was $1 5 million.
Including 1.16 million on our two trust preferred debt instruments 292000 on our senior promissory notes and 19000 on our credit line as a reminder, during the third quarter of 'twenty four we restructured two thirds or $5 1 million of our redeemable financial instruments into.
Speaker Change: Promissory note and repaid one third or $2 6 million in cash.
Speaker Change: In terms of the balance sheet at the end of the year total equity was $93 million compared to $91 8 million at the end of 'twenty three.
Speaker Change: Non convertible non controlling interest component of total equity was at 11 and a half a million at the end of the year compared to $9 6 million at the end of 'twenty three.
Speaker Change: Thus the total enterprise equity excluding the non convertible non controlling interest was $78 8 million as of December 31 of 24 or $3 $4 million decrease from the prior year.
Speaker Change: At quarter end consolidated corporate indebtedness was carried at $34 9 million.
As Lester mentioned, we have declared a quarterly dividend of <unk> 25 per share payable on April 9th to stockholders of record as of March 26th The board of directors will continue to evaluate the dividend policy each quarter and future decisions regarding dividends will be impacted by quarterly.
Speaker Change: Waiting results and our capital needs.
Speaker Change: That I will turn it back over to Lester for closing remarks.
Speaker Change: Thanks, Joe Please correct any offline investor questions to Joe Pooler at 2157, or one 895, two or via email at Investor Relations at Cowen and company Dot Com. The contact information can also be found at the bottom of our earnings release, operator, you can now open the call lines for questions.
Speaker Change: Thank everyone for joining us on our call today.
Speaker Change: Thank you if he would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if either they came out with your question from the queue for participants using speaker equipment may be necessary to pick up your handset before pressing the star keys one.
Moment, while we poll for questions.
Speaker Change: As a reminder, it is star one on your telephone keypad.
Speaker Change: There are no questions at this time would you like to make any closing remarks.
Speaker Change: No that's it I hope to see everybody in our next quarterly call. Thank you very much.
Speaker Change: Thank you. This will conclude today's conference you may disconnect at this time and thank you for your participation.
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